Consumers Consume: August 22 – 26

Consumers continued spending this summer. Here are the five things we learned from U.S. economic data released during the week ending August 26. 


Inflation slowed, and consumer spending remained resilient in July. The Bureau of Economic Analysis estimates real Personal Consumption Expenditures (PCE) gained a seasonally adjusted 0.2 percent, its best increase since April. Real spending rose 0.2 percent for both goods and services, with the former split between a 1.5 percent advance for durable goods and a 0.5 percent drop for nondurables. Without adjustments for price variations, nominal PCE inched up 0.1 percent, funded by 0.2 percent gains for both nominal personal income and disposable income. Real disposable income jumped 0.3 percent. The savings rate held steady at its pandemic low of +5.0 percent. Over the past year, real PCE has risen 2.2 percent even as real disposable income fell 3.7 percent. The PCE price index fell 0.1 percent (thanks, in part, to lower gasoline prices), while the core PCE price index inched up 0.1 percent. The former has risen 6.3 percent over the past year, and the latter has gained 4.6 percent over the same 12 months. Both inflation measures remained well above the Federal Reserve’s two percent target.

Economic activity accelerated in July. The Chicago Fed National Activity Index (CFNAI) swelled by 52 basis points to a reading of +0.27, its best reading since April. A reading above zero indicates the U.S. economy expanded faster than its historical average. Fifty-five of the CFNAI’s 85 economic data components positively contributed to the index. All four major categories of index components made positive contributions: production (adding 16 basis points to the CFNAI), employment (+9 basis points), sales/orders/inventories (adding a basis point), and personal consumption/housing (adding a basis point). The CFNAI’s three-month moving average held steady at below-average economic growth reading of -0.09.

A slight improvement to the Q2 GDP estimate. The second estimate of second quarter 2022 Gross Domestic Product (GDP) has the U.S. economy shrinking 0.6 percent on a seasonally adjusted annualized basis. The Bureau of Economic Analysis previously reported that GDP fell 0.9 percent during Q2. Even with the upward revision, the U.S. economy has contracted for two consecutive quarters. The biggest drags on the economy were (in descending order) the change in private inventories, fixed residential investment (housing), imports, and government expenditures. The same report provided the first estimate of Q2 corporate profits, which jumped an annualized 6.1 percent following Q1’s 2.2 percent decline. Corporate profits were 8.1 percent ahead of year-ago levels. The BEA will update Q2 GDP and corporate profits in late September. 

Consumer sentiment stabilized thanks to a slightly less inflationary outlook. The University of Michigan’s Index of Consumer Sentiment jumped 6.7 points in August to a seasonally adjusted 58.2 (1966Q1=100). The measure has improved by 8.2 points since hitting its all-time low in June. The current conditions index added a half point to 58.6, while the expectations index surged 10.7 points to 58.0. The press release noted that respondents expect prices to rise 4.8 percent over the next year, consumers’ lowest inflation expectations in eight months. 

Durable goods orders cooled in July. New orders for durable manufactured goods held steady at a seasonally adjusted $273.5 billion. This followed four consecutive monthly gains for the Census Bureau data series. Transportation goods orders fell 0.7 percent, as a sharp drop in defense aircraft orders outpaced rises for both motor vehicles and civilian aircraft. Non-transportation goods orders advanced 0.3 percent in July (matching June’s gain). Civilian non-aircraft capital goods orders—a proxy for business investment—increased 0.4 percent. Durable goods shipments rose 0.4 percent to $270.5 billion, while that of non-transportation goods held steady. Unfilled orders swelled for a 23rd straight month (+0.7 percent to $1.127 trillion) and inventories expanded 0.2 percent to $486.2 billion. 

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending August 20, 2022, First-Time Claims, seasonally adjusted): 243,000, -2,000 vs. the previous week, -152,000 vs. the same week a year earlier). 4-week moving average: 247,000 (-39.4% vs. the same week a year earlier). 
  • New Home Sales (July 2022, Single-Family New Home Sales, seasonally adjusted annualized rate): 511,000 (-12.6% vs. June 2022; -29.6% vs. July 2021).
  • Pending Home Sales (July 2022, Index (2001=100), seasonally adjusted): 89.8 (-1.0% vs. June 2022; -19.9% vs. July 2021).

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

Comments are closed.

Blog at

Up ↑

%d bloggers like this: